The economies of Southeast Asia have endured one of their worst years since the end of World War II. Now, hopes for growth are pinned on the U.S. recovery.
Many governments have recently reported their respective countries' real gross domestic products for the fourth quarter and total 2001. The numbers have been dismal, leading institutional investors such as CalPERS to pull out of Asian equity markets. On Feb. 18, Indonesia said its economy fell 1.2% in the fourth quarter, compared with the third. For the year, real GDP rose 3.2%, less than expectations and not nearly fast enough to create many jobs for Indonesia's population of 207 million. The surge in joblessness has stoked political and religious violence in the island nation. Then on Feb. 22, Taiwan said its economy fell 1.9% in the fourth quarter, compared with a year ago. For the year, real GDP was also down 1.9%, the first annual drop in output in the postwar era. Malaysia reported a 0.5% fall in its real GDP in the fourth quarter and grew only 0.4% for the whole year. Hong Kong and Singapore also are expected to report declines in fourth-quarter output. The only major Southeast Asian economy bucking the trend is the Philippines, where real GDP grew 3.4% for all of 2001.
Southeast Asia has stumbled badly because global demand for its major high-tech exports, such as semiconductors, was slammed by the U.S.-led global slowdown. In response, central banks have cut interest rates, in some cases quite sharply. And weaker currencies have helped make exports more price-competitive.
But in the final analysis, governments are mostly counting on a turnaround in world growth to boost their export growth and, thus, lift overall output and jobs. This forecast depends greatly on a rapid U.S. recovery. In particular, Southeast Asian exporters are hoping that the U.S. capital-goods sector picks up this year. Unfortunately, the U.S. tech sector may not turn around quickly enough in 2002 to stop Asian unemployment from rising further.
By James C. Cooper & Kathleen Madigan